Consumer fatigue: is Double 11 still worth the effort ?

With the diversification of livestreaming channels and online platforms, consumers looking to purchase at the lowest price are overwhelmed with options.

This year, Double 11 has set more records in numbers, yet it is clear consumers are enforcing a turning point. Slowing sales growth does not mean the end of?Chinese consumer power, but rather a new transformation. “Sustainable Growth” is the new metric that consumers and commercial actors are measured by. Alibaba’s chief marketing officer Chris Tung said the company was shifting its attention from big sales numbers to “sustainable growth”.

Tmall grew 8.45% compared with last year, its slowest pace in years, given that turnover growth stood at 24%, 28% and 85.62% respectively between 2018 and 2020. JD.com, another e-commerce platform, fared slightly better, with transactions exceeding 349.1?billion yuan, up 28.58% year-on-year.

“Sixth Tone” statistics from Dianshubao, a major database of Chinese e-commerce companies, show that the transaction value of the “Singles’ Day” network amounted to 965.12?billion yuan, up 12.22% year-on-year, not exceeding the trillion mark. The trading volume of the top two platforms accounted for 92.15% of the total online trading volume.

We have identified three reasons for the slowdown:?

1.GOVERNMENT RESTRAINTS

Due to the anti-monopoly law in China, and the ban on ‘996’, e-commerce giants have been more low-key on “Singles’ Day” this year compared with previous years.

2. LIVESTREAM E-COMMERCE

The surge in livestream e-commerce, especially Wei Ya & Li Jiaqi, the 2 top KOL, has diluted the shopping season to daily huge promotions.

3. OTHER BIG SHOPPING SEASONS

With more big shopping seasons like ‘618’ & ‘1212’, ‘Singles’ Day’ has become just one of many big shopping seasons. Promotions are sometimes ever more spectacular during these other 2 seasons.

Yet given that Alibaba sales reported an 8.5% increase year-over-year and JD a 29% increase, the deeper truths to this slowdown should be examined.

MUTATING E-COMMERCE — BARBARIC GROWTH STRATEGY.

E-commerce platforms are under strong public scrutiny regulating their business practices. Regulators have coined their business growth strategy as ‘barbaric’, forcing them to mutate their approach to the festival this year. Ironically, it revealed how important these festivals are for the future of these platforms. For example, they are now forced to abandon anti-competitive policies which allowed them to squeeze merchants. It has also been reported that officials had incentives to keep enthusiasm for the festival alive after China’s retail sector reported lower sales numbers this summer.

Double 11 has set a standard for platforms and brands to create increasingly complex discounts and a gamification system designed to make shoppers buy more.

What was perceived as good-natured at first by some has now overwhelming become their daily life as consumers. More and more are voicing their frustration at having accumulated junk over the years for so little benefit. A word recently emerged on Chinese social media,?

“Cou Dan”, or “fill out your bill,” a gimmick in which you are required to buy a relatively cheap item — a T-shirt from last season, your 12th pair of socks this year, or a roll of double-sided tape you’ll toss in your closet and forget about until the next time you move — to meet an arbitrary purchase threshold for a bigger discount.

This year’s L’Oréal performance exemplifies these rising tensions.

Double 11 2021 generated a record-high turnover of $313.6?million (2?billion yuan) for L’Oréal. Yet this remarkable growth has been followed by a PR hell. Chinese netizens believe the brand acted with fraudulent promotional practices.

The brand is now topping Weibo’s search for consumer complaints due to a simple price promotion error. The price of its masks ($67) — advertised at their “lowest price of the year” — was 66-percent higher during presale livestreams (including those run by Viya and Austin Li) than the prices during L’Oréal’s livestream on November?11 ($40).

CHANGE IN CONSUMER BEHAVIORS TO NEGATIVE IMPULSION

One key change is in consumer behaviors. Double Eleven used to spur positive emotions and excitement, but this year clearly marks a turning point in negative feelings and fear of missing out.

“One simple explanation for consumers’ disinterest is that we’re all simply tired of the platforms’ games. For years, many of the discounts associated with the festival have existed only on paper; in some cases, they’re price hikes. For example, a wireless speaker I had my eye on was listed as on sale this year despite costing significantly more than it did just six months ago. I suppose it’s possible that the company is just an innocent victim of the global chip shortage, but similar mysterious price spikes happen just before every Double Eleven”, writes an analyst from China’s Sixth Tone. This is an example of fear-mongering marketing —?consumers don't know whether or not they are getting the lowest price.

This recent behavioral change manifested itself in the birth of new activism.

A group named “Don’t Buy” has peaked with 300,000 members in one year on social media. They portray themselves as anti-consumerists or what they called “rational geese”. They post about marketing tricks and share practical tips for avoiding impulse purchases like how to unfollow livestreamers or change the color of shopping app interfaces to more calming tones.

FEAR-MONGERING MARKETING STRATEGIES

Reflecting back on the past 10 years, many criticized the unfriendly set-up of the event. Consumers had to wait in front of their iPhone screens for the stroke of midnight on Nov.11 in order to access to “special prices”. These were only offered at midnight or in limited quantities, forcing consumers to set?alerts and triggering a high fear of missing out.

Side hustle and overtime has now become the norm in the economy and consumers are questioning the real value of saving a few hundred yuan over sleep and peace of mind. In response to this fear-mongering behavior, JD moved up the start time of its special offers to 8 p.m., and there is now a pre-Double Eleven shopping festival on November?1. Causing more anxiety, brands are releasing coupons in small batches to keep customers on a high.

This feeling of helplessness is more and more recurrent in online conversations. It is still hard for consumers to be sure whether the prices on Double Eleven are truly at their lowest or whether they will rise afterwards. Post-Double 11, many on social media commented the need to buy products at normal prices instead of calculating discounts from endless coupons.

Double 11 continues to be an important event for boosting brand and product exposure, but brands should focus on establishing positive relationships with end consumers rather than pursuing skyrocketing GMV.

By Tanguy Laurent , Co-Founder, Managing Partner, Strategy Director at Creative Capital ?